Arizona is one of 8 community property states in the nation. So what does this mean?
ALL property acquired during the marriage is considered community property except that property (1) acquired by gift, devise, or descent (e.g. inheritance), or (2) property acquired after the service of the petition for dissolution/legal separation. This means that every paycheck received, every contribution into a retirement account, every vehicle purchased, etc., that is acquired during the marriage is considered community property.
You can give up your interest in community property through an affirmative act. For example, you can opt out of community property through a prenuptial agreement, or you could sign a disclaimer deed, waiving your interest in a home acquired during the marriage. But note, placing funds in a “separate” bank account (an account with only one spouse named on the account), does not make those funds separate property. Generally, without an affirmative act to the contrary, all property acquired during the marriage is community property.
Separate property is that property acquired prior to the marriage, acquired by gift, devise, or descent, any increase on separate property, and that property acquired after the date of service of the petition for dissolution/legal separation.
The same idea applies to debts. All obligations acquired during the marriage, before the service of a petition for dissolution/legal separation, are considered community obligations. In order to prove that a debt incurred during the marriage was not a community obligation, one would have to prove by clear and convincing evidence that the debt was not intended to benefit the community. One example of a separate obligation incurred during the marriage would be a debt incurred in conducting an extramarital affair.
Both spouses, husband and wife, have the equal management and control of community property. With few exceptions, both spouses have an equal ability to bind the community to an obligation. The fact that the other spouse knew of or consented to a debt is not necessarily required.
In general, community property and debts are going to be divided equitably between the parties. More often than not, equitably means equally.
Community Property can be a complicated and confusing area of the law, especially when it involved business interests, real property, student loans, personal injury awards, gambling, inheritance, retirement accounts, and the like. Consult with one of our attorneys to see how you can protect yourself when dividing your assets as part of a divorce or legal separation.